Innovation is a hot topic in the business world. There has been a lot written about the importance of innovation and role of the CFO in creating a culture that encourages innovation rather than squelching it. What does not get discussed much is how to increase innovation through management and measurement. This report summarizes the findings of a survey conducted in 2015 by the IMA? (Institute of Management Accountants) on innovation practices by companies around the world.
More than half of the respondents said their firms don?t measure innovation at all. Those that do tend to use simple measures such as the number of new products, services, and/or patents, and the percentage of sales revenue from new products. Yet almost all felt their organizations should measure innovation success. Furthermore, three-fourths said their organizations must significantly evolve or reinvent their business value propositions at least every five years.
Senior finance and accounting leaders are increasingly being asked to lead, support, or measure innovation efforts in their organizations. The CFO is well positioned to lead and support this activity. The more importance placed on innovation in the organization, the more comfortable the accounting and finance leaders feel leading innovation efforts. The report discusses ways that CFOs can lead and support innovation governance in their organizations, such as making innovation part of the planning and budgeting process and establish processes for pursuing innovation initiatives.?